Internet Access Charges

Is Congress going to allow phone companies to charge you long-distance rates for accessing the Internet?

10

Claim: Congress will soon be voting on whether or not your phone company will be allowed to charge you long-distance rates for accessing the Internet.

Status:False.

Example:[Collected on the Internet, 1999]

Please forward this to everyone you can…

There is a new bill in the US Congress that will affect ALL INTERNET USERS. CNN stated that the Government would in two weeks time decide whether to allow or not allow a Charge to YOUR phone bill equal to a long distance call each time you access the Internet.

This affects us all! We cannot allow this to happen! Please visit the following URL and fill out the necessary form to let your Congressman know how you feel! The address is http://www.house.gov/writerep/. Write your representative!

Origins: Neither the FCC nor Congress is considering — much less voting on — legislation that would impose (or allow phone companies to impose) per-minute access fees on Internet users. Recent decisions by the FCC in this area have dealt only with the issue of how phone companies reimburse each other for handling calls placed to Internet service providers, not with the prospect of allowing phone companies to charge their customers long-distance rates for Internet use.

As soon as we get hold of something we really like at a reasonable price, we start worrying that it will be banned, taxed, or made too expensive for us to afford. The Internet is no exception, as our old friend — the capitalized, exclamation pointed, “send this to everyone you know” anonymous e-mail message — is here to tell you.

Way back when in 1987, the Federal Communications Commission did consider imposing a surcharge for transmitting data over the public telephone network, but they ultimately rejected the idea (thanks in part to the more than 10,000 letters of complaint they received). Unable to believe our good fortune (the government wasn’t going to make us pay through the nose for dialing up all those neat computer bulletin boards we’d discovered), we couldn’t leave well enough alone, and in 1991 a flood of urgent messages warning us that the FCC was again considering a proposal they’d rejected three years earlier hit e-mail systems all over the country (and the nascently popular Internet). Like the ubiquitous Craig Shergold message, the “modem tax” warning would long outlive the validity of the information it conveyed.

Fast forward to 1998. On-line services, the Internet, the World Wide Web, e-mail, and chat rooms are more popular than ever, a daily part of many people’s lives. Somebody — the government, the phone companies, Bill Gates, the Grinch — must be on his way to spoil the party. Sure enough, we’re now being told the phone companies and the government are in cahoots to ruin our good

time.

First of all, a little background. Most of us still have to dial up over a modem and connect to an Internet Service Provider (ISP) to access the Internet. If your ISP is in your local dialing area, you probably don’t pay anything at all for the call, no matter how long you stay connected. This means you get to tie up a phone line with your modem for hours and hours on end, every day, at no charge beyond the price of basic phone service. And the party at the other end of the line — your ISP — isn’t paying anything extra, either. It’s easy to see that somebody has a chance to reap some windfall profits here. If the phone companies were allowed to charge you a per-minute fee for accessing the Internet (or the government were allowed to tax your use of the Internet), their coffers would soon overflow with cash.

Scary thought, isn’t it? All the phone companies need, we hear, is to get the FCC to reclassify and/or regulate ISPs, and then the phone companies can charge gobs of extra money for handling Internet traffic. And Congress is just about to vote on that very issue, we’re told.

In fact, there is no such proposal before Congress, and there never has been.

The only real issue before the FCC concerning Internet usage (and the genesis of this latest round of scaremongering) is the subject of “reciprocal compensation.” In short, reciprocal compensation means that when you place a local call to someone who is serviced by a different phone company, your phone company has to compensate his phone company for completing the call. (On the other hand, when you place a long-distance call, the long distance carrier who handles the traffic has to pay access charges to your phone company for originating the call.) But if the “person” you’re calling is an ISP, should your phone company have to compensate the ISP’s phone company?

The subject of reciprocal compensation has been a hot issue of late because new local phone companies have been springing up all over the place. The bigger phone companies, figuring that they would have many more customers than their newer (and smaller) competitors, negotiated reciprocal compensation agreements with the new phone companies. Every time one of these little phone companies’ customers placed a call to a destination outside his local service that ended up on the bigger phone company’s network, the big phone company would get to collect money from the little phone company. Not a bad scheme, the big phone companies thought.

Ah, but some of the little guys had a neat trick up their sleeves. They started offering their services to Internet service providers — ISPs with banks and banks of modems that received thousands and thousands of calls every day, but never made any outgoing calls. All the reciprocal compensation started flowing one direction, from the big phone companies to the little phone companies, which wasn’t what the big guys had in mind at all. “Foul,” they cried. “Internet traffic flows all over the world,” they noted. “Internet traffic is therefore interstate in nature and should be classified as long-distance, so the little guys should be paying us for originating the calls,” they insisted. “We’re not paying,” they sputtered.

Enter the FCC to resolve the dispute, which they did (for now) on 25 February 1999 by ruling that phone companies are bound by whatever reciprocal compensation agreements they’ve negotiated with each other, whether they think they’re fair or not. That was the only issue before the FCC. But most of us are already struggling with a glut of information, and we don’t have the time to familiarize ourselves with details like interconnection agreements and reciprocal compensation, so when we hear reports with buzzwords like “Internet,” “FCC,” “access fees,” and “long distance,” we assume the worst, even though the real story is something quite different. And even if we make the effort to understand the whole story, we find all too often that we’re reading information that has been misreported by others — often the mainstream media — who didn’t make enough of an effort to understand the whole story themselves. If we can’t even depend upon the people whose business it is to supply us with accurate information to get the facts straight, what more can we do? (See, for example, the misleading headline on the CNN article referenced in the “Additional information” section below.)

A few important points related to the recent FCC decision:

Didn’t the FCC rule that Internet connections are long-distance calls?

Sort of. The FCC declared that “Internet traffic is jurisdictionally mixed and appears to be largely interstate in nature,” which is the technical definition of “long distance.” But that doesn’t mean — as is often misreported — that Internet users will be paying long distance rates for dial-up connections, since the Internet has been, and still is, exempt from interstate access charges. The FCC did nothing to abolish that exemption.

Won’t the phone companies just pass the cost of carrying Internet traffic to customers by raising their phone rates?

There is no guarantee that phone rates won’t go up in the future, of course. However, since most states require phone companies to charge a flat rate for unlimited local usage, you won’t have to pay per-minute charges for accessing the Internet (as long as your ISP has a dial-up number within your local service area).

What if the FCC changes its mind?

The possibility exists that the FCC might someday decide that additional fees can be imposed for Internet access. But as Bill Kennard, the chairman of the FCC, has stated on more than one occasion: “I want to say this as clearly as I can . . . as long as I’m chairman of the Federal Communications Commission this agency will not regulate the Internet. It’s not going to happen. The FCC has no intention of making computer users pay long distance fees for dial-up access to the Internet, as people now pay when they make long-distance telephone calls. These rumors get on the Internet that the big bad FCC is going to impose all this regulation on the Internet. Now I know this painfully because every so often when one of these rumors flares up I get, literally, about 600 e-mail messages a day by people who are telling me to keep my hands off the Internet.”

[Note: this is not a direct quote from Kennard; it is pieced together from multiple statements of his.]

In May 2000, a bill entitled the

Reciprocal Compensation Adjustment Act of 2000 was introduced in the House. This bill seeks to eliminate reciprocal “payment for the transport or termination of telecommunications to the Internet or any provider of Internet access service” after existing interconnection agreements expire. Whether this bill will ever pass, and what effect it will have on the rates charged to dial-up customers by ISPs if it does, are unknown factors.